Wednesday, October 16, 2013

Dividend Increase: KMI

Kinder Morgan, Inc. (KMI) is increasing its quarterly dividend by 2.5%, from $0.40 to $0.41 per share (news release). This is the fourth increase from KMI this year, resulting in an overall increase of 13.9% in 2013. Given that I own 165 shares of KMI, my quarterly dividend increases from $66.00 to $67.65 and my yield on cost becomes 4.45%. The extra $6.60 in annual dividend income raises my forward 12-month dividend total to $2,925. Thus far this year, there have been dividend increases for 28 of the 31 stocks in my portfolio.

11 comments:

Hi DGI That it is really good to see the dividend increases. Thanks for taking the time to update these in midst of your new job etc. On the same regard for the remaining 3 stocks i take it INTC is one of them, with their recent earning announcement, just wanted to see your feedback on is it a viable stock as part of the Div Growth machine going forward?. Is it time to bail out like ADM. Hoping to see INTC announce a div increase by Feb 2014.

Anonymous: Thanks for your comment. My new job is keeping me busy (for example, it's 9 pm and I just finished some work at home), but I try to keep my blog updated in a timely manner.

The three remaining stocks that have yet to increase their dividends in 2013 are VFC (announcement expected later this month), BDX (announcement expected in November), and INTC. In the case of INTC, I plan to continue to hold into early 2014. The latest earnings report was okay -- not great, but okay considering the headwinds faced by the company. I don't think of INTC in the same category as ADM because they are very different businesses. ADM experiences much more earnings and free cash flow volatility from year to year, partly due to factors beyond its control (e.g., the weather and its effects on crop yields). INTC, on the other hand, has more predictable earnings even though they've been declining for a while. I also still think INTC has good growth prospects and just needs to execute better.

Anyway, the next dividend declaration for INTC should come in late January, and we'll also get another earnings report around that time. Until then, I'll continue to hold.

Thanks for your clear and detailed explanation as always. Sure that is good idea, will hold till next earnings and see if the dividends are increased and/or share buy backs are done to increase the total return and will make a decision by end of Feb 2014.

As the largest holding in my portfolio as well (need to update my site), KMI continues to impress with it's yield and continued growth. Definitely looking forward to the next few years as they continue to grow.

Anonymous: For MLP-like entities such as KMI, earnings are not meaningful, so neither is the P/E ratio. You need to look at metrics like distributable cash flow (DCF), which also determines the money available to pay dividends. Even when this is done, KMI still has a high payout ratio, but the stability and growth of its DCF helps to mitigate this concern. The fact that the company continues to increase its dividend multiple times per year suggests that management is not concerned about cash flow going forward.

Wow I'm so excited about the ABT increase! The best part is that it's now within range for me to purchase additional shares. I've always been a big fan of Abbott, but in recent years I haven't considered a purchase. 2013 = low yield; 2012 = looming spinoff. I'm glad I hung on to my shares and look forward to accumulating additional pieces of the business. I think it's now pretty obvious that the dividend is still paramount to ABT.

I'll be very interested to see what ABBV decides to do with its dividend. They have room for a healthy increase, just have to see what direction management wants to go. I have considered unloading my Abbvie shares but think I'll wait to see what happens to the dividend. The value of my ABBV shares has roughly doubled over my adjusted basis, incredible!

The ABT/ABBV story has been a massive win for you, I, and everybody who held on post spinoff. Spinoffs seem to create value.

I agree that the ABT/ABBV story has been a big win for us. The massive dividend increase from ABT was fantastic. I have a feeling that ABBV will announce a decent-sized dividend increase (over 10%). A lot of folks expressed uncertainty about the dividend growth from ABT and ABBV at the time of the split, but with a 40-year history of dividend growth pre-split, I thought it unlikely that the managements would change their approaches to rewarding shareholders. I consider the dividend increase from ABT to be a strong signal that its management will continue the (pre-split) ABT commitment to higher dividends over time.

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